business

Thinking differently: Japan works to escape the Galapagos effect

16 Comments
By Richard Smart for The Journal (ACCJ)

The young are lucky. Twitter Inc, the micro-blogging platform, launched in 2006, enjoys high growth and has created the kind of environment that attracts the staff it wants.

Without the constraints of long-term employees who are difficult to dismiss, the company has been able to choose staff attracted to its brand. Those that come on board are generally comfortable with the company’s ideas.

“Most of us come to Twitter because of an interest in the product itself, which is an open communication platform,” Yu Sasamoto, the company’s manager for Japan, told The Journal.

That has allowed Twitter to foster an environment that shuns the top-down approach to management in favor of participation by all involved in the company’s creative decision-making process.

“I don’t think many [employees are] very surprised when they understand that the company and culture are aligned with its product,” Sasamoto says.

It should not be difficult to come by staff who want to participate in the day-to-day running of companies and managers who embrace that approach. But the government feels that is not happening. Abenomics, as the centrally planned economic revival policies of Japan are known, is focusing on internationalization as essential to reviving the economy.

“Steadfast policies are required to overcome the yoke of supply constraints due to the decreasing population,” the government states in a revision of the nation’s growth policies, released July 10. Translation: Fewer Japanese due to a declining population means more need for foreign cash, and Japan is not doing enough to attract it.

ISLAND MENTALITY

Japan has an obsession with internationalization, or kokusaika in the vernacular. But population worries aside, the sting of a declining electronics sector as Silicon Valley goes from strength to strength, the rise of companies such as South Korea’s Samsung that can compete on hardware, as well as being overtaken by China as the second-largest economy in the world, have all taken their toll.

Back during his first tenure as prime minister in 2007, Shinzo Abe said, “It has become obvious that many of the basic frameworks—from the constitution down to the administrative system, education, the economy, employment, state–local relationships, foreign policy, and national security—have become incapable of adapting to the great changes taking place in the 21st century.” All these ills, so the logic goes, can to an extent be remedied by internationalizing.

Defining what characterizes internationalization is difficult, but the Ministry of Economy, Trade and Industry attempted it in 2010. It sees the following as some of the key requirements for internationalization:

  • Human resources departments that can take measures to expand the company overseas, treat all company branches equally, and pay attention to all staff
  • The ability to recognize skills and deploy them appropriately
  • Tie-ups with business schools and other relevant educational institutions
  • Clear job descriptions, career paths, and feedback
  • Teams comprising staff from many countries
  • Diversity in management and no tolerance for harassment

There are plenty of headlines that suggest more can be done to achieve these goals. Julie Hamp, Toyota Corp.chief communications officer until recently, resigned after a package sent to her was found to contain a substance the United States considers a medicine and Japan a drug.

Takata Corporation, a Japanese company, has been slammed in the United States for its faulty airbags, which have caused deaths. It recently rejected the idea of setting up a compensation fund for victims in the United States. Toshiba Corporation, meanwhile, has made headlines after owning up to cooking its books.

Multiple problems require multiple answers. Rakuten Inc.’s CEO Hiroshi Mikitani is placing his bet on “Englishnization.” His idea is to make staff conduct all business in English, and incentivize those who master the language.

“Englishnization is, in my opinion, not just a Rakuten strategy, but a global strategy for Japan,” he wrote on LinkedIn. “Other Japanese companies are taking note.”

Honda Motor Co., Ltd. is among those. “It is vital to develop an environment that achieves close communication between associates in [Honda’s] six regions worldwide,” the company wrote in a June 29 news release. “Therefore, Honda is working to set English as the official language when we engage in inter-regional communication by 2020.”

A strategy such as Rakuten’s, however, perhaps misses a point that Twitter seems to realize. Speaking English alone is not enough. “In theory, Englishnization is fantastic,” one former Rakuten employee, who did not want to be identified, told The Journal.

“In practice, [there are] lots of challenges. Let me put it this way, the foreigners nicknamed this place gaijin (foreigner) graveyard.”

The employee felt Rakuten failed to listen to foreigners, instead focusing on maintaining wa, or the Japanese tradition of harmony, in the office. Strong and risky opinions were sacrificed in favor of more conservative ones, whether expressed in English or not.

Rochelle Koppe, managing principal at Japan Intercultural Consulting, a human resources consultancy, believes it is essential to make sure staff go beyond learning the language and get on board with Western customs.

“English is, of course, something very important,” she says. “It’s kind of the entry ticket to global business. But I think also necessary is cross-cultural understanding, a comfort level with interacting with people who are not Japanese.”

WAKE-UP CALL

The government is trying to make sure that, alongside reforms that affect all staff, executives are also made to change their ways. Codes for stewardship and corporate governance introduced over the past 18 months, aim to encourage investors to question the way companies are run and discourage docility in shareholders, as is often found in the West.

By giving shareholders more of a voice in the way a company is run, for example, the codes can make a difference to work culture—at least in theory. The reforms “are a good start, but it takes years to produce enduring behavioral change in organizations and among investors,” says Nicholas Benes, representative director of the Board Director Training Institute of Japan. “It takes a lot of learning of new concepts, structures and procedures.” Benes sees adding foreigners to boards as one way to make sure the corporate culture in Japan improves. “Who you have on your boards sets the tone for a company. And the number of foreigners on Japanese boards is low.”

For Benes, a major issue is that the stewardship code is not being used effectively. “The most important thing to happen next is for the [Government Pension Investment Fund (GPIF), Japan, an administrative agency] to be a steward,” he says.

“Today, it just shuffles paper. If you look at similar public pension funds overseas—all are smaller—most of them have publicized detailed corporate governance practices that they encourage portfolio firms to adopt, or at least point to the country’s corporate governance code.

“The GPIF has nothing like that. When the GPIF hires fund managers, it has no governance filter for making sure they are active as stewards. They do not have a filter for making sure fund managers are following the code—and in fact, the GPIF has not ever publicly supported the code.”

Still, with or without leadership by the GPIF, Benes believes that the codes mean change is coming. The only questions are how much and how soon. “What you will see in the next few years is a divergence between those companies that get it and those that are doing the old stuff,” Benes says. “The ones that get it will serve as examples for those that don’t.”

Custom Media publishes The Journal for the American Chamber of Commerce in Japan.

© Japan Today

©2019 GPlusMedia Inc.


16 Comments
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"...a comfort level with interacting with people who are not Japanese.”

This is a pretty sad statement right here. But the way things are structured, this is not likely to change. The education system is still a salaryman factory. There's just not much leeway for experiencing the world.

9 ( +9 / -0 )

Abe said, “It has become obvious that many of the basic frameworks—from the constitution down to the administrative system, education, the economy, employment, state–local relationships, foreign policy, and national security—have become incapable of adapting to the great changes taking place in the 21st century.”

I am pretty sure that Abe's remedy is not internationalisation though. It is to polish off Japan's ultra-nationalist, fascist, corporatist, totalitarian past and set it on a new pedestal. The occasional sops to foreigners and women are both smokescreens and means to that end.

6 ( +6 / -0 )

Amazing how METI defines 'internationalisation', yet has made ZERO inroads into enforcing meaningful change. Let's dissect, shall we? It's going to be brutal, so hold on folks...

Human resources departments that can take measures to expand the company overseas, treat all company branches equally, and pay attention to all staff.

I think we all know that 'HR' is a fallacy in corporate Japan, as it's never anyone's responsibility - regardless of the issue. No HR manager has influence on changes in management, no union has any influence on worker's (lack of) rights.

The ability to recognize skills and deploy them appropriately

Never going to happen. 'Blank sheet' mass-hiring is the method of choice for the old boys' club. Appropriation? Accountants in marketing positions, PR reps in website design positions. I could go on forever.

Clear job descriptions, career paths, and feedback

There's no corporate ladder in Japan. Nothing but dead-ends & glass ceilings. Let's not even get onto the age bias & gender discrimination issues.

Teams comprising staff from many countries

Doesn't work. At the end of the day, Japan does things Japan's way.

Diversity in management and no tolerance for harassment

Can't contain my belly-aching laughter. They're dreaming.

The employee felt Rakuten failed to listen to foreigners, instead focusing on maintaining wa, or the Japanese tradition of harmony, in the office. Strong and risky opinions were sacrificed in favor of more conservative ones, whether expressed in English or not.

This is the crux of the problem. Again, corporate Japan does things Japan's way & is not open to compromise. Which is fine, of course - but on the international stage, it's getting left behind. Corporate Japan is still in a post-war industrialisation mentality that it is clawing onto with a vice grip. I have a handful of friends who've been through the Rakuten revolving door and it's not pretty. Amazon is light years ahead because they take risks & invest. Let's face it - Rakuten is merely a portal (and an awfully designed one at that)!

Japan will have to go through decades of hardship before any forcible changes are put into place. We have at least two - three more generations of old boys' club tyranny before Japan wakes up.

6 ( +7 / -1 )

Japan has an obsession with internationalization, or kokusaika in the vernacular.

I would say it has had an unhealthy obsession with it; both trying to copy and shun it at the same time.

That's why Japan is stuck in limbo. They can't decide if they want to go global or return to the Edo period.

5 ( +9 / -4 )

The Julie Hamp paragraph doesn't fit in with the rest of this analysis. Oxycontin is a medicine in both the US and Japan. She wasn't too bright in taking in so much clandestinely. She should have privately dealt with her issues before she took up residence in Japan. Also I have seen quite a few articles that say that Japan "considers" Oxycontin a narcotic. Narcotic is a chemical definition and not a judgement call. Drugs that come from poppies, or are synthetic, that have a similar chemical structure, are narcotics. That's all there is to that definition.

What does an example of one American, possibly being a narcotic addict, and sneaking in a good amount of a substance that is more controlled than others in most countries, have to do with Japan's internationalization?

4 ( +4 / -0 )

The major obstacle for many Japanese corporations is the fact that Japan as a market is more than big enough such that overseas markets just aren't as appealing as they are to companies like Samsung who's domestic market isn't quite big enough.

I work for a mid-size Japanese company that has a international business department (which I work in), but currently 90+% of sales come from the domestic market, so none of the execs are too keen on taking more risks and taking the initiative overseas.

Given the changing demographics, shifting more focus outward will definitely become a necessity, but at the moment the short term domestic gains are too large to risk in favour of long term international security.

3 ( +4 / -1 )

@timtak I think you're missing some stuff there. You forgot toilets. Toilets and washing machines! "I believe it is less the quantity of creativity, but the type of creativity that each society/education encourages." Many societies fail at education depending on how you're keeping score. Japanese higher education is a salaryman factory in Japan. I get that you like it that way but I get the feeling you think Japanese people are going to thank you for your support. I know some that might not!

3 ( +4 / -1 )

Nothing will change... why? Because Japan is already fully accounted for. Every possible industry, from delivering newspapers to building Jets, Cars and Skyscrapers, is fully saturated with those that have vested interests and will fight to keep them. There are no "cowboys" because there is no growth... in growing markets everyone is busy meeting demand and do not have time to secure their market. Japanese markets are secure. You try starting a new business in Japan... the powers that be will be watching... if you look like you might be successful they'll take your idea or they'll put up barriers to keep you out. Again... Japan has been contracting for over 20 years... that is a long time to shore up relationships. Sure there will be success stories, you cannot stop all change, but overall the level of entrepreneurism in Japan is stifled by lack of growth and groups with vested interests. Look at Google, Amazon, Netflix, Uber, eBay and on and on... was it because American's speak English that these companies were created or because they were not shot down during infancy by vested retailers / possible competitors and such?

3 ( +4 / -1 )

It should not be difficult to come by staff who want to participate in the day-to-day running of companies and managers who embrace that approach.

LOL. This is Japan we are talking about. Where every bit of creativity and individuality is beaten out of people from the moement they enter the education system. You cannot expect them to suddenly change when they join the workforce.

Japan has an obsession with internationalization, or kokusaika in the vernacular. But population worries aside, the sting of a declining electronics sector as Silicon Valley goes from strength to strength, the rise of companies such as South Korea’s Samsung that can compete on hardware, as well as being overtaken by China as the second-largest economy in the world, have all taken their toll.

And all of these developments have been there for the world to see for a couple of decades. But Japan did nothing, and still does not have the ability to be proactive, rathet than reactive. The much-valued Japanese skill of making "minor changes/improvements" is a weakness, and not a strength, when companies like Apple and Samsung are creating whole new categories of products every six months. REVOLUTIONARY thought is required, not evolutionary. And Japan does not foster that.

2 ( +8 / -6 )

What's with this "Englishnization" anyway? Wouldn't "Englishization" be easier to pronounce, as well as being closer to "Anglicization", which is, actually, a word?

2 ( +3 / -1 )

This opinion piece is not well thought out: it seems to be suggesting that management practices are failing Japan, and there needs to be more decision-making input from workers and from shareholders. Since these two groups have quite different goals--job security, meaningful work, satisfactory pay, etc. vs. short-term profits and portfolio performance--how is this going to work unless there is worker-ownership or shareholders are enlightened enough to see from the data that companies that value and involve employees generally increase profits over the long-term.

The writer also sees Twitter as a good example because it doesn't have "the constraints of long-term employees who are difficult to dismiss." The writer fails to consider another option for management. Perhaps if these long-term employees are trusted more and less repressed in their jobs they will perform much better and won't need to be "fired".

0 ( +5 / -5 )

Without the constraints of long-term employees who are difficult to dismiss, the company has been able to choose staff attracted to its brand

I live in Silicon Valley. IT is completely non-unionized. Most hirees are young. I mean young 20s and early 30s. When staff reaches middle ages, they are sent away. And a new crop hired.

Good for the business. Bad for most the employees.

0 ( +1 / -1 )

There are plenty of headlines that suggest more can be done to achieve these goals. Julie Hamp, Toyota Corp.chief communications officer until recently, resigned after a package sent to her was found to contain a substance the United States considers a medicine and Japan a drug. I think this reporter has to do a little more research before he writes something like this again. The substance he is talking about Oxycontin is available in Japan, unfortunately my friend battling cancer is taking it twice a day. Also, while it is a medicine in the US, having 54 pills at once might be considered unusual.

-1 ( +1 / -2 )

The writer also sees Twitter as a good example because it doesn't have "the constraints of long-term employees who are difficult to dismiss." The writer fails to consider another option for management. Perhaps if these long-term employees are trusted more and less repressed in their jobs they will perform much better and won't need to be "fired".

@warispeace The "We'd hire more people if we could fire more people" line of thought is deeply ingrained in all those who have swallowed the mantra that Japan's economic problems are cultural and structural in origin (and ignore that identical economic and systemic failure is now seen in all countries) and who believe religiously that "reform" is needed, especially reform of the "inflexible" labor market. Even though the reforms made so far have had disastrous effects economically and demographically, they don't care because GroupThink practitioners don't know what the word "evidence" means. So don't expect your use of logic to get very far either.

“Steadfast policies are required to overcome the yoke of supply constraints due to the decreasing population,” the government states in a revision of the nation’s growth policies, released July 10. Translation: Fewer Japanese due to a declining population means more need for foreign cash, and Japan is not doing enough to attract it.

This passage makes zero economic or logical sense. One, there is no relation between the Japanese population and the amount of Japanese yen, and two, even if there was foreigners don't supply Japanese yen. As for foreign cash it is not used in Japan, it is used in, um, foreign countries.

-1 ( +2 / -3 )

@shallots I agree that Japanese toilets are very much more creative and advanced than Western toilets. It seems to me that due to their lack of creative toilets, and their lack of creative interest in their own bodily form, most or many Westerners generally walk around with un-clean and overly large posteriors.

If Japanese education is a salaryman factory (alas that seems to be less and less the case) then it would be doing its job well, since salarymen are what are required by Japanese society, and what brought about the greatest "economic miracle," and many of the most creative products, (Sony, Honda, Toyota, Panasonic, etc) in human history.

I don't think that Japanese are going to thank me for anything but I do feel grateful to the Japanese for allowing me to live, love and survive in their wonderful, and highly creative culture.

"Toilets and washing machines!"

That said, Japanese education "fails" at creating people who look down upon other cultures. In that respect, @shallots, your education was a success.

-2 ( +0 / -2 )

@jerseyboy

LOL. This is Japan we are talking about. Where every bit of creativity and individuality is beaten out of people from the moment they enter the education system.

There are many creative endeavors in which the Japanese excel, such as manga, anime, architecture, automotive, automotive customization, bridges, super express trains, fashion, cosmetics, production machines, baseball, cuisine, and cycle parts. I prefer my NEC made phone to an iPhone, which are made in a country culturally fairly similar to Japan.

@jerseyboy again

The much-valued Japanese skill of making "minor changes/improvements" is a weakness, and not a strength, when companies like Apple and Samsung are creating whole new categories of products every six months. REVOLUTIONARY thought is required, not evolutionary. And Japan does not foster that.

You are right to say that Japan does value the making of minor changes and improvements, but a lot of things originate in Japan. Japan is seething with "chindougu" or strange tools, or (un)Useless inventions. Here is a list of some among which the selfie stick is now a lucrative product for someone in East Asia http://justsomething.co/23-craziest-japanese-inventions-you-never-knew-existed/

Lets face it, East Asians make pretty much all the things in the world, and like other East Asians, and perhaps even more so, the Japanese excel at thing making (monozukuri), which requires creativity.

From an East Asian perspective Westerners can look pretty lacking in creativity: all they do is take other people's stuff and put names on it.

I believe it is less the quantity of creativity, but the type of creativity that each society/education encourages.

-4 ( +5 / -9 )

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